INTRODUCTION:
Accounting managers are responsible to identify the goals and objects of their company and apply . The methods which help them to achieve the targets which increase the firm value and conducted to the organization plan (budget).

Problem:
Organization managers are concern about their target income and avoiding losses so, implementation of CVP analysis will answer the below question: 1) What sales volume is required to avoid loss? What sales volume is required to earn a target income? 2) What is the most profitable combinations of our elements Factors (fixed cost , variable cost, selling price , volume , profit ). 3) How can managers measure the effect of changes in(FC, unit variable cost, price)(cost structure) on the profit ? 4) Which cost structure is the better (high) variable cost, and (low) fixed cost, or the opposite? 5) If the underlying assumptions changes how an outcome will change if the original predicted data are not achieved? 6) How can mangers incorporate taxes? 7) Which product should we emphasis on, if the company producing multiproduct?

ASSUMPTION UNDERLYING CVP ANALYSISI:
The basic CVP models are subject to these limiting assumptions: 1) The selling price is constant throughout the relevant range. 2) All costs are classified as fixed or variable . 3) Unit variable cost is constant. 4) There is one constant sales mix . The only factor effecting (variable cost) is volume or level of activity.

The contribution margin :
Which is the deference between revenues and variable cost .It is the amount of money available to cover fixed cost and to generate profit. (CM) is the first used to cover the fixed cost and then what ever remains go towards profit .(CM)explained in the following equation : Sales Revenues- total variable cost =CM CM-fixed cost = OI

Contribution margin income statement :
It is a alternative format of income statement , organized the costs by behavior rather than by function the statement highlight the relationship of variable cost and fixes cost ,regardless of the functions. The contribution margin income statement is (internal tool) which is deferent from the traditional income statement (for internal reporting), Shows the classification of costs that is , manufacturing cost versus non- manufacturing expenses.

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| * It converts needs and wants
into a product. |
* It aims at profit through sales volume. | * It aims at profit through service and customers demand. |
* It views customer as the last link of the business. | * It views customer as the very purpose of the business. |
* Price is based on cost sent on production | * Price is determined on the basis of consumer preference |
* Make the buyers aware | * Make the sellers aware |
| |
| |

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